Ireland: Court Of Appeal Considers Rules Governing The Granting Of Security For Costs

Last Updated: 16 January 2018
Article by Ricky Kelly and Ciara Ní Longaigh


On the 15th of December 2017, Mr. Justice Gerard Hogan delivered the long-awaited Court of Appeal decision in the case of Used Car Importers of Ireland Limited v Minister for Finance, Revenue Commissioners, Ireland and the Attorney General. The decision offers clarity on when an order for security of costs pursuant to Order 86 Rule 9 of the Rules of the Superior Courts ("RSC") will be awarded and what the level of those costs should be.


The plaintiff company, Used Car Importers of Ireland Limited ("UCII"), specialised in the importation of used cars from other right-hand car markets where vehicle taxes tended to be lower. UCII challenged the system of vehicle registration in Ireland and contended that the method of valuing imported cars utilised by the Revenue Commissioners was "artificial and non-transparent" resulting in the inflation of the true value of imported vehicles. UCII argued that the system was operating ultra vires the parent legislation as well as contending that the legislation was unconstitutional and violated Article 78 of the Sixth VAT Directive. The High Court proceedings were determined in 2012 following a 33 day hearing and the UCII's action was dismissed with an order for costs made against it. UCII lodged an appeal with the Supreme Court which was subsequently transferred to the Court of Appeal pursuant to Article 64 of the Constitution.

Jurisdiction to Order Security for Costs

Justice Hogan considered the jurisdiction of the Court to order for security for costs. The basis for the security application by the State was expressed to be under s. 390 of the Companies Act 1963 (the "1963 Act") or s. 52 of the Companies Act 2014 (the "2014 Act") or Order 86 Rule 9 of the Rules of the Superior Court (the "Rule"). The Court noted the importance of the jurisdictional issue on which the State sought to rely due to the differences between the various statutory provisions and rules.

Justice Hogan noted that while the State's application post-dated the repeal of s. 390 of the 1963 Act it was arguable that it applied in circumstances where s. 390 was in force when the proceedings were commenced and on the date of the issuing of the original appeal to the Supreme Court. In this regard the Court acknowledged the difference between s. 390 of the 1963 Act and s. 52 of the 2014 Act and the argument that the full quantum requirements of s. 390, as set out in Lismore Homes Ltd v Bank of Ireland (Finance) Ltd [2001] 3 I.R. 536, no longer applied to s. 52 due to the removal of reference to "sufficient security".

Ultimately the State opted to ground its application for security on the provisions of Order 86 Rule 9 of the Rules of the Superior Courts but submitted that some of the case law relevant to s. 390 had continuing applicability to its application.

Order 86 Rule 9 of the Rules of the Superior Court

Justice Hogan, quoting the Rule noted the reference to "special circumstances" as implying that security is generally not required but instead confined to special or clearly identified categories of cases. Justice Hogan identified the leading authorities in relation to the categories of what may constitute "special circumstances" as being the decision of Walsh J. in Midland Bank Ltd v Crossley-Cooke [1969] I.R. 56 and Clarke J. in Farrell v Bank of Ireland [2013] 2 I.L.R.M. 183.

Justice Hogan stressed that of all the categories poverty or impecuniosity of the applicant is a prerequisite to the making or an order for security. As a preliminary remark, the court accepted that UCII was facing serious financial difficulty and was not in a position to discharge the High Court order for costs.

Justice Hogan then went on to consider the categories of "special circumstances" identified by Walsh J. in Crossley-Cooke as follows:-

1. Existence of arguable grounds

Justice Hogan discussed circumstances where an appeal discloses no arguable grounds or reasonable prospect of success. He stated that it has long been established that neither the Court of Appeal nor the Supreme Court will extend time where there is no real prospect of success and noted that the same can be said of applications for security under Order 86 Rule 9. However, in the present case, he noted that the appellant had disclosed arguable grounds for appeal.

2. Impecuniosity of a limited liability company plaintiff

The court examined circumstances where the impecuniosity of a limited liability company plaintiff is at issue and noted that this was another recognised category of special circumstances. Justice Hogan noted that unlike a personal plaintiff, an order for security in these circumstances may be required even at first instance. In the present case, two countervailing circumstances as to why no order for security for costs should be made were presented to the court; i) the fact that the plaintiff's impecuniosity was caused by the defendant's wrongful conduct and ii) that the present appeal involves a point of law of public importance.

  1. Plaintiff's impecuniosity was caused by the defendant's wrongful conduct

    Justice Hogan accepted that a plaintiff may resist an order for security where it can be shown that the defendant's wrongful conduct caused or contributed to the plaintiff's impecuniosity. He drew a distinction however between straight-forward actions for personal injury and those for damages for negligence, breach of EU law and breaches of constitutional rights. He noted however, in light of the three heads of claim in the present circumstances, it would be difficult to establish a link between the impecuniosity of UCII and any alleged wrongful conduct of the State that might entitle UCII to damages.
  2. Point of law of public importance

    The court noted that it is clear from the authorities that security will not always be ordered even when a case presents a point of law of exceptional public importance. Justice Hogan set out that as the Court of Appeal has now replaced the Court of Criminal Appeal, the question the Court of Appeal must ask is whether the issue before it is of general public importance rather one of exceptional public importance. Justice Hogan went on to highlight that the present claim was fundamentally one for damages issued by a private company. He noted that while the issues before the court in the present case were of considerable importance, he did not believe them to be of general importance to the public and as a result held that the ordinary rules as to an order for security should continue to apply.

Level of Quantum of Security

Justice Hogan quoted from the decision of Clarke J. in Farrell in relation to the object of security. In particular he noted that the security rule was to ensure "fair process" as between parties. To achieve this Clarke J. identified two factors that needed to be present:

  1. There must be a countervailing potential interference with the right of the respondent/defendant such that it would justify directing security for costs; and,
  2. The nature and scope (quantum) of the security must be proportionate to the situation.

The Ruling

Justice Hogan held that State's application fell within the scope of Rule so that it was appropriate to order payment of a deposit or other security. He further found that as the plaintiff was an impecunious limited liability company security will generally be ordered in the absence of "sufficiently weighty countervailing circumstances". Justice Hogan found that no such circumstances had been established by UCII and accordingly granted the State's application.

In considering the quantum of any such security Justice Hogan invited the parties to make further submissions as to the extent of such security.


It is clear from this decision that there remain circumstances where s. 390 of the 1963 Act may still apply and that, when granting an order for security, the Courts will measure the quantum proportionate to the situation. This decision offers support to the decisions of Finlay Geoghegan J. in Flannery & Anor v. Walters & Ors [2015] IECA 147 and Laffoy J. in Ticket Generator Limited v Dublin Airport Authority plc & Ors [2012] IEHC 216 that the Courts may depart from the long established rule, that the quantum be not more than a third of the costs likely to be incurred (the "One-third Rule"), where doing so was necessary and proportionate.

It remains to be seen whether the Court of Appeal will be required to adjudicate on whether it is proportionate to depart from the One-third Rule in this case.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions